Is obtaining a reverse mortgage right for me?

Date: 21 August 2014
Is obtaining a reverse mortgage right for me?

Taking out a mortgage is typically a financial burden homeowners must shoulder for a number of years. However, a mortgage can also be a boon to your bank account if you take out the reverse variety.

What is a reverse mortgage?

A reverse mortgage lets you borrow money using the equity you've built up in your property as collateral. You can get money as a lump sum, a regular payment, a line of credit or a combination of all three.

Like any other type of loan, there will be interest attached. However, you don't have to make any repayments while you still live in your home.

In fact, you only have to repay the loan once you vacate your home. For many retirees looking to bolster their post-work income, taking out a reverse mortgage can be a valuable strategy.

Pros and cons of reverse mortgages

The advantages of taking out a reverse mortgage are obvious - they allow you to make use of your equity at a time when funds may be tight. If you plan on living out the rest of your life in your home, the loan may not need to be repaid until after you pass away and your home is sold.

However, reverse mortgages come with their own unique disadvantages, as well. The most obvious is that you most likely won't be able to leave your property as an inheritance to any relatives.

Additionally, reverse mortgages often come with significant fees attached to them, as well as high interest rates. 

Before you obtain a reverse mortgage, you should think long and hard about whether it suits your overall retirement plans and financial strategy for the future.

It can pay to work with an experienced, objective financial planner before making any big decisions regarding your home.

Back to articles Filed under: Media / National News Tags: ’australian, ’blog’, ’real, a, estate’, 'first, for, is, me?, mortgage, national, obtaining, property’, real, reverse, right
There are currently no comments on this article

Leave message

 Security code